Weak pound 'may wreck holidays'

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The weak pound "may yet wreak havoc" on Britons' plans for short breaks abroad and ski trips, a new report has warned.

A study by Post Office travel services concluded "exchange rates are still unpredictable" due to the downturn.

It says all-inclusive package deals may become more popular while many tourists may opt to travel off-season.

The pound's value against the euro has slumped over the last year and sterling fell to its weakest level since 1985 against the dollar on Wednesday.

A year ago, a euro cost about 74 pence. It is now about 94 pence and tourist rates can often be worse.

Easter test

The Post Office report said: "If predictions prove accurate, the short breaks sector could come under serious pressure in the coming year as consumers limit themselves to one major holiday.

"The first test of this is likely to come at Easter, traditionally the start of the holiday season when UK tourists head to European cities."

It says foreign shopping trips and luxury holidays are also under threat, while ferry-based holidays may benefit from the economic downturn.

The report suggests other beneficiaries could be all-inclusive package deals, coach tours and camping trips - holidays "where tourists know in advance what their outlay will be".

It says there has been growing interest from holidaymakers in countries such as Turkey, which is not in the eurozone.

Holidaymakers may also try to avoid the traditional peak holiday months of July and August, the study added.

But travel agents remain hopeful the fall in the price of oil, which has an effect on airfares, will encourage more flight bookings.

Sterling fell to its weakest level against the dollar since September 1985 on Wednesday, with the pound touching $1.3622 before rising to $1.4015.

The pound remains weak against the euro, with the single currency worth more than 93.3 pence on Wednesday.